How does a non-participating whole life policy's premium compare to a participating whole life policy's premium?

A non-participating whole life policy typically has a lower premium compared to a participating whole life policy. This is largely due to the fundamental differences in how these two types of policies are structured.

In a non-participating whole life policy, the policyholder pays a fixed premium that does not change over time, and they do not receive dividends. Since the insurance company does not need to allocate funds for potential dividends or manage investments with the expectation of offering policyholder returns, the cost of these policies tends to be lower.

On the other hand, a participating whole life policy does involve the potential for dividends based on the insurer's performance. These dividends depend on the company's profitability, and the policyholder shares in the financial success of the insurer, which can lead to higher premiums. The premiums collected also account for more comprehensive coverage options and potential returns through dividends.

Thus, the difference in premium cost reflects the distinct benefits associated with participating policies versus the stable, lower-cost structure of non-participating policies.